A representative from Barclaycard says the terminals at O2 will accept all NFC contactless cards and phones issued in the U.K. Representatives from Visa Europe were not immediately available to comment on the initiative.

On event nights, 75% of transactions attendees conduct are less than £15 pounds (US$23.26 or 17.45 euros), the typical transaction amount targeted for contactless payments. Barclaycard, which has installed 250 payment terminals in the arena, claims contactless payments are faster than regular card or cash payments and can help reduce lines at food, beverage and merchandise counters.

The deal further demonstrates Visa's and Barclaycard's commitment to drive contactless in the United Kingdom, one European analyst says.

“O2 is an important venue,” Zilvinas Bareisis, senior analyst at London-based Celent, tells PaymentsSource. Multiple merchants operating inside, and it will be part of the London Summer Olympics in 2012, he says.

The arena also hosts many live concerts and other events that attract thousands of attendees. Since 2007, Barclays has issued more than 15 million contactless cards consumers can use at 56,000 locations in the UK.

As with most new payment technologies, contactless has faced a "chicken-and-egg" situation, where both issuance and acceptance have had to evolve in parallel to produce market growth, says Bareisis. “While Barclaycard has been at the forefront of this activity, other banks are needed on board for this to take off in a big way,” he says.

Visa Europe and Barclaycard also are putting particular emphasis on mobile payments.

Barclaycard has spent much of the year promoting contactless payments, including through a TV ad that feature mobile payments (see story). Moreover, Barclaycard and wireless-network operator Everything Everywhere Ltd. in May officially launched the UK’s first contactless mobile-payment system, which uses a pay-as-you-go handset from Samsung Group (see story).

Visa Europe announced a deal in March with mobile phone manufacturer Samsung Electronics to roll out an Olympics-themed smart phone in conjunction with the London Summer Olympics.

Bareisis supports the move toward mobile contactless. “I believe mobile rather than cards will become the tipping point for contactless development in the UK in the future,” he says.